Rail sweeteners will not worry Brussels

If Clare Short, Labour's new transport front-bencher, expects help in the fight against rail privatisation from her former colleague, Neil Kinnock, she will almost certainly be disappointed. To believe the headlines, Mr Kinnock could prove a big stumbling-block. The truth, however, is that the Brussels transport commissioner has already put the issue in a file marked boring and routine. Colleagues make clear he is showing no signs of turning it into a cause celebre l ike his battle with the Spanish government over the rescue of the airline Iberia.

The idea that subsidies for a privatised railway are different from the money already funnelled in huge quantities to the existing state-owned companies is plain daft in a Europe where unsubsidised railways are as common as unicorns. Approval from Brussels is necessary, because the subsidies will be going to private firms and will almost certainly rise for the first year or two. But it is hard to see approval being long delayed.

A rather subtler point Mr Kinnock must deal with is whether new guarantees given to the three-rolling stock leasing companies, after they are privatised, will amount to state aid, and if so whether the guarantees distort the transport market. The issue arises because the potential new owners of the Roscos, for which bids thought to be worth pounds 1.7bn-pounds 1.8bn are on the table, have been offered two sweeteners.

The first is a contractual commitment by the Government to pay part of the cost - but less than 100 per cent - of modifying existing rolling stock if the safety authorities demand improvements. Here again, it is hard to see why Brussels would need to interfere. Since the Government already owns the Tocs and is responsible for the entire safety bill the new arrangements simply switch some of the existing risk onto the private sector. The potential cost to the state will as a consequence fall.

The second sweetener is a guarantee from the Government that in the event of insolvency among the Roscos' customers, the state will pay up to 80 per cent of the lost rental income on the rolling stock. The rationale for this is that is that since the Roscoswill be sold next month before the train operating franchises have been let, their new owners can know nothing of the financial viability of new private sector customers and need protection as a consequence.

Neither sweetener appears to increase the financial risk to taxpayers after privatisation, and it is even harder to see how they could distort the transport market. There is plenty wrong with rail privatisation, but Labour is barking up the wrong tree on this one.

Start your day with The Independent, sign up for daily news emails
Voices
Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Sport
Raheem Sterling of Liverpool celebrates scoring the opening goal
footballLIVE: Follow all the latest from tonight's Capital One quarter-finals
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
PROMOTED VIDEO
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Travel
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
News
i100
Life and Style
tech
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Ashdown Group: Java Developer - North West London - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Selby Jennings: Corporate Communications & Marketing Specialist – Geneva

120,000 - 150,000 chf + bonus: Selby Jennings: A leading Swiss Private Banking...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Scandi crush: Stockholm is rivalling Silicon Valley

Th Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum
France's Front National and the fear of a ‘gay lobby’ around Marine Le Pen

Front National fear of ‘gay lobby’

Marine Le Pen appoints Sébastien Chenu as cultural adviser
'Enhanced interrogation techniques?' When language is distorted to hide state crimes

Robert Fisk on the CIA 'torture report'

Once again language is distorted in order to hide US state wrongdoing
Radio 1’s new chart host must placate the Swifties and Azaleans

Radio 1 to mediate between the Swifties and Azaleans

New chart host Clara Amfo must placate pop's fan armies
Homeless Veterans appeal: 'It's life, and not the Forces, that gets you'

Homeless Veterans appeal: 'It's life, and not the Forces, that gets you'

The head of Veterans Aid on how his charity is changing perceptions of ex-servicemen and women in need
Torture: It didn't work then, it doesn't work now

Torture: It didn't work then, it doesn't work now

Its use is always wrong and, despite CIA justifications post 9/11, the information obtained from it is invariably tainted, argues Patrick Cockburn
Rebranding Christmas: More public bodies are refusing to give the festival its name for fear of causing offence

Rebranding Christmas

More public bodies are refusing to give the festival its name for fear of causing offence. They are missing the point, and we all need to grow up